Registered proprietors of businesses bear personal responsibility for ensuring that all tax is paid on time, even if their day-to-day management is delegated to others. That principle was applied in one case in which the owner of a florist’s shop put complete trust in his then girlfriend to keep its tax affairs in order.
The man, whose principal occupation was installing satellite dishes, said that he had nothing at all to do with running the shop and was unaware that the business had missed 18 VAT payments. He left everything to his then partner and simply assumed that she was running things smoothly. The first he knew of any VAT difficulties was four years after the defaults started.
Following the end of the relationship, the man was required to pay £5,590 in late payment penalties on top of all the arrears of VAT. He candidly admitted the defaults, and did not argue that he had a reasonable excuse for the late payments. However, he argued before the First-tier Tribunal (FTT) that there were exceptional circumstances that meant that the penalties should have been waived.
In rejecting his appeal, however, the FTT noted that, as proprietor of the business, he bore ultimate responsibility for timely submission of VAT returns and payment of the tax when it fell due. He had no adequate process in place to ensure that those obligations were met and had no valid excuse for the defaults.